The Securities and Exchange Commission (SEC) has lost a second significant insider trading case – involving a California-based computer storage device business – following the recent clearing of Nelson Obus, manager of the Wynnefield Capital hedge fund, of insider trading allegations.

After just a few hours of deliberations, a Santa Ana jury cleared Manouchehr Moshayedi, a co-founder and ex-CEO of STEC, in a civil lawsuit stemming from allegations of trading on inside information.

The SEC claimed wrongdoing when Moshayedi sold company stock, and shares owned by his brother, Mehrdad Mark Moshayedi, in a secondary offering that coincided with the release of the company’s Q2 2009 financial results and revenue guidance for Q3.

“In the days leading up to the secondary offering, Moshayedi learned critical nonpublic information that was likely to have a detrimental impact on the stock price,” the SEC said in 2012. “Moshayedi did not call off the offering and abstain from selling his shares once he possessed the negative information unbeknownst to the investing public. Instead, he engaged in a fraudulent scheme to hide the truth through a secret side deal, and proceeded with the sale of 9 million shares from which he and his brother reaped gross proceeds of approximately $134 million each.”

But the California jury was not convinced by the government’s case.

“We are extremely grateful to the members of the jury for their hard work and their focus on the evidence,” Patrick Gibbs, an attorney with Latham & Watkins, who represented Moshayedi, said in a statement sent to InsideCounsel. “They reached the right result.”

When asked for comment on the Moshayedi outcome, SEC spokesman John Nester said in a statement released to InsideCounsel, “We respect the jury’s verdict, but will continue to aggressively enforce the law when we believe the evidence supports the allegations.”

During the proceedings, the SEC requested partial summary judgment related to liability, and Moshayedi’s attorneys requested summary judgment on all of the SEC’s claims. Both motions were denied by U.S. District Court Judge James V. Selna.

“The complex evidentiary record makes it clear that there are numerous factual disputes at issue. Accordingly, neither party is entitled to summary judgment on the issue of scienter,” the judge said in the ruling. He explained that scienter is a “mental state embracing intent to deceive, manipulate, or defraud.”

In arguments made to the judge, Moshayedi’s attorneys said the “SEC failed to present evidence that could reasonably support a conclusion that Mr. Moshayedi acted with scienter or that he traded on the basis of any material information.”

“Moshayedi planned to sell his shares well-before he learned of the allegedly material ‘facts’ on which the SEC has built its case and that receipt of those facts did not cause the sale,” the attorneys further claimed.

The recent jury verdicts in the Nelson J. Obus and Moshayedi cases also come after SEC Chairman Mary Jo White made public statements that the commission will take more difficult cases to trial.

Still, there is a limit into how much can be read into the SEC losing some recent cases.

“I don’t think the SEC is keeping score,” David Parker, a litigator and risk manager at Kleinberg, Kaplan, Wolff & Cohen, who counts a number of hedge funds among his clients, told InsideCounsel in an interview on Monday. “Each case, of course, has to be assessed on its own merits.”

In reviewing the number of recent SEC trials, Reuters reported “there has been a surge.” The SEC finished 24 trials in the current fiscal year, compared with 16 last year, Reuters added.

Earlier this month, the SEC also announced it dismissed its civil lawsuit against Parker H. "Pete" Petit. The SEC claimed that when Petit was chairman and CEO of Matria Healthcare, he provided information to a friend who made two purchases of Matria stock, according to a statement from Petit. Petit denied any wrongdoing.

Turning back to the Moshayedi case, the SEC explained that in July 2009 STEC announced a large customer, EMC Corporation, agreed to buy $120 million worth of the ZeusIOPS solid state drive products in Q3 and Q4 of 2009. But the SEC claimed Moshayedi learned nonpublic information “that EMC’s actual demand for the ZeusIOPS was lower than previously expected.” He found out that EMC would want about $34 million worth of ZeusIOPS in Q3 – less than analyst estimates. EMC also had told Moshayedi it “would never again enter into a similar agreement with STEC,” the SEC said in a statement.

Moshayedi then made a “secret side deal” with EMC “to meet third quarter consensus revenue estimates,” the SEC said. EMC took $55 million worth of ZeusIOPS in Q3 “in exchange for an undisclosed additional $2 million price discount on the product….”

STEC was acquired by Western Digital Corp in 2013, according to Bloomberg News.